Pinterest Business Model – How does Pinterest Make Money

These days you are just a click away from getting inspired. Whether you are looking for travel inspiration, or food or decoration inspiration, you could get all that with a simple search. Especially the popular image sharing and social networking service, Pinterest is contributing a lot in this.

In fact, the era of inspiring people with visuals started with this unique platform called Pinterest. It has been inspiring people with amazing visuals AKA pins since nearly 10 years, all for free.

Pinterest is a popular site for discovering new ideas started in January, 2010 by Ben Silbermann, Paul Sciarra and Evan Sharp. It is a huge space for finding images, videos and GIFs related to any niche, of course, the platform doesn’t need an introduction if you have been on it for a while. Simply, it is an easy-to-use and little search engine to find something you exactly want. Because, you will not need to read long articles till the end to find the little information you need or watch lengthy videos to find that simple trick.

However, what most people wonder is how this brilliant platform makes money if it serves the huge discovery for free. Well, if you are one of those, you will find the answer in this article. This article covers what exactly is Pinterest, how does it work and makes money. So, shall we get started?

What is Pinterest?

Pinterest is a media sharing and networking service designed to help people discover and save the information on the internet as Pins which are similar to bookmarks. These pins saved by users drive them to the websites where those visuals are created. Users can save the pins and organize them on their private or public boards and access them whenever they would like to.

This platform, however, is commonly known as a social networking site, it is not a platform to post personal life pictures or media like Facebook, Instagram etc. As of the second quarter of 2020, this giant discovery platform has over 367 million monthly active users across the world. It had just 10,000 users nine months after its start. This is to simply say, how fast the website is growing its users. However, the number is no where nearer to other social networking sites such as Facebook, Instagram, Twitter, etc.

So, now coming to how Pinterest makes money, you should first see how it works.

How does Pinterest Work?

Millions of users pin billions of images and other media related to a vast range of categories such as travel, food, parenting, fashion, architecture, other products every day. It, in fact, has become a go-to search engine for many discovering stuff as the results are eye appealing (as they are images, videos and GIFs). This is why users have become one of the two key players in Pinterest business model. Wondering who is the other key player? Advertisers. Yes, there is business in the absence of these two.

Advertisers don’t come to the platform if there are no users. There is no revenue if there are no advertisements. Therefore, Pinterest works purely on user base and advertisers base.

How it Works for Users?

Users just need to create their account and start discovering the stuff they are looking for. Users can search for pins and get results according to their interests. They can even save the pins and organize them in their boards either accessible to public or else private. 

Users can even share their media to the platform, comment on others pins etc. In short, it is the same as other social media sites, it’s a little unique though. 

How it Works for Advertisers?

The working model for advertisers is the same as it is for other ad platforms such as Google Ads, Facebook, YouTube. Advertisers have to bid maximum to ensure their ad is placed on the top. The bid amount will be based on the industry, product category and target user demographics.

Read: Google Business Model – How does Google Make Money

The ad will either appear on side bars of users boards or appear on search results. The advertisers are provided with the option of setting an “Install App” or “Buy” button in the ad or they can simply users to their website.

So, wondering why do even advertisers look at this platform when they can meet the same audience base on other platforms such as Facebook or Google. Well, let’s look at that in the next section: how does Pinterest make money. Let’s see its business model and find out why and how it became such a popular go-to platform for not only moms, dads but also everybody who loves to discover interesting things on the web.

How does Pinterest Make Money?

Over 88% users purchased a product they pinned on Pinterest. More than 49% purchased more than 4 products they pinned or re-pinned. What’s more interesting is nearly 79% of Pinterest users are female who are likely decision makers in families. So, as you see the platform is converting the users well. Exactly, this is how Pinterest makes money and why advertisers turn towards the platform.

Advertisements/Promoted Pins

Though the user base is incomparable with the internet and mostly with Facebook, the conversion rate is high. It is always a wise option to start a campaign where conversions are huge rather than the huge user base which don’t convert much. So, the paid pins or promoted pins or ads bring money to Pinterest.

Pinterest introduced its revenue model in 2013, meaning it didn’t have a plan or didn’t earn a penny until then. Like other social networking sites, it started its service for free and gained a huge user base. The strategy turned out so that now it has a higher conversion rate. Hence, more and more advertisers are considering the platform to create brand awareness and grow more customers.

Here are four types of conversion campaigns which let advertisers reach to grow their business. The campaigns are self-explanatory as their names say it all.

1. Check out

2. Sign Up

3. Lead

4. Add to Cart

As per Q12020 Financial Highlights, Pinterest’s revenue as of 2020 is $271,940 whereas it was $201,911 with a 35% growth.

But it is not as Pinterest only sees profits. It had seen a lot of losses in its earlier days, and even in recent years in stocks. It experienced a $141,196 net loss as of 2020, whereas the net loss was $41,420 in 2019.

Okay, further talking more about revenue in Q12020,

  • Global – $272 million
  • U.S – $237 million
  • International – $35 millions

Thus, it is transparent that Pinterest makes money only through promoted pins. There is no way they make money unless there are no advertisers. However, that won’t happen because Pinterest takes the best care to serve its users with awesome pins and as said there are 367 billion monthly users for the platform. Moreover, people use the platform for saving their future purchase ideas, be it travel plans, furniture, fashion products etc. Hence, what’s the best platform other than this where users are exploring what to buy. In fact, this is why Pinterest has become a sweet spot for advertisers to run campaigns.

So, Is the Pinterest Business Model Sustainable?

So far, Pinterest is attracting advertisers well to bid for campaigns to buy user’s attention. Therefore, the service platform is making enough to sustain however, as mentioned, it’s revenue is no where relatable to other social networking sites. Moreover, this platform which started as a small scale business has grown to a level where it’s competitors are giant companies like Facebook, Google, YouTube etc. Pinterest only makes money through advertising, therefore its competitors are such top tier companies.

Therefore, it goes without saying that Pinterest sees a tough competition in future as well. 

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